Analyse this


Only The value of talent Samuel Gordon H


i again! I hope you have been enjoying the spring. Just as the weather heats


up, so too has the attention on emerging talent.


So, how does the value of a graduate compare to the value of an apprentice?


At the moment, finding an answer is very tricky. There is some research out there about the value of apprenticeships and degrees to students – higher level apprentices could be earning £50k more than graduates from a non-Russell Group university over a lifetime, according to the Sutton Trust – but very little research on the relative value of these hires to an employer.


Over the next five years, the impact of graduate schemes and apprenticeships will come under closer scrutiny. Part of the reason for this is the apprentice levy, which will drive employers to think carefully about the financial impact of their hiring. However, we are also seeing AGR employer members get smarter about managing multiple forms of talent and using analytics in their work.


In an increasingly sophisticated market, it’s time we started taking this question seriously.


Getting more measurements will be an important first step. Only a third of AGR development professionals calculate the value that graduates bring to their business. What’s more, 24% of AGR employers do not calculate the cost of graduates to their business, and 77% do not even measure the impact of skills training on productivity. More data on the impact of hires, and what affects this impact, will be needed.


That is not to say that calculating the value of young talent is not worth trying. In terms of apprenticeships, the best attempt I have seen was in 2015 by the Centre for Economics & Business Research (CEBR). They looked at the typical output of employees in different sectors, calculated the output of apprentices as a percentage of this, and then subtracted training and wage costs over a year.


Their conclusion was that employers typically gain £1670 a year from employing an apprentice (at least to start with, while they are being trained). By region and by sector, apprentices in London added the most value, as did those in leadership and management jobs. The report also concluded that apprenticeship training added £10,000 to the annual value of an apprentice, with the impact of training in engineering and


construction apprenticeships being almost double that number. The value of apprentices clearly depends on the training they receive.


Comparing this with the value of graduates is harder; AGR is still building evidence. We know that over half of our members currently run apprenticeships, and that the number of apprentice hires was roughly half the number of graduate hires in 2015. At an industry level, can we assume that the value of graduates is at least twice as much as apprentices? Knowing the relative impact of hires in one business might take another few years.


As a starting point, it seems like apprentices and graduates progress through businesses at similar rates. For 29 AGR firms who tracked the progression of both types of talent, the apprentices typically earned 31%


more than their starting salary after three years, while the graduates typically earned just 25% more.


This result should be interpreted with care. The sample of employers is small. Graduates and apprentices go into different types of roles, apprentices may have a lower salary to start with, and may have spent more time driving their development by the third year because of shorter training programmes. Similar rates of salary progression do not necessarily mean that apprentices add more value than graduates, or increase their relative value to a business faster.


However, it hints that the output of apprentices and graduates is in the same ballpark. In which case, this is food for thought.


a third of AGR development


professionals calculate the value that graduates bring to their business.


www.agr.org.uk | Graduate Recruiter 31


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